Revised projections show growth in China could end up being slower than the rest of Asia for the first time in more than three decades.
The World Bank has slashed its 2022 forecast for annual GDP growth in China to 2.8 percent, according to its latest estimate, which is significantly lower than previous projections earlier in the year which predicted a 4-5 percent rise.
The Beijing government itself is targeting 5.5 percent GDP growth this year after China's economy staged a strong recovery from the pandemic in 2021 when GDP rose 8.1 percent.
The downwards revision was driven by concerns over the ongoing property crisis and the dampening effects of extensive lockdowns from Beijing’s continued zero-Covid policies, which are expected to reach into 2023.
Asia Ex-China
In contrast, the World Bank projects that the rest of Asia, excluding China, will grow 5.3 percent in 2022, up from 2.6 percent last year as a result of higher commodity prices and a post-pandemic rebound in domestic consumption.
Should this turn out to be the case, it would mark the first time since 1990, or more than three decades, that China’s growth would lag behind that of the rest of Asia.
Debt Risk
Growth is expected to be especially strong in Southeast Asian economies due to a rebound in exports and an easing inflation rate. On the latter issue, the World Bank noted that this was driven by subsidies for items like fuel or food and that these could increase the wealth gap and public debt.
Moreover, rising interest rates and a strengthening dollar increase debt pressures in countries like Mongolia and Laos, which are already showing signs of stress.
